The U.S. District Court for the District of Massachusetts recently awarded prejudgment and post-judgment interest in the trade secret suit between CardiAQ Valve Technologies and Neovasc (No. 14-cv-12405-ADB (D. Mass.)), adding another $21 million to the $91 million judgment entered against Neovasc last October. The case underscores the fact that extended litigation in trade secret disputes may significantly increase damages calculated under a reasonable royalty standard.

The suit stemmed from CardiAQ’s hiring of Neovasc in 2010 to help construct prototypes of a valve-implant device. CardiAQ alleged that Neovasc breached the parties’ nondisclosure agreement and misappropriated CardiAQ’s trade secrets by using CardiAQ’s confidential information to develop its own competing product. Following a two-week jury trial in May 2016, CardiAQ was awarded $70 million in damages for Neovasc’s theft of trade secrets. Judge Burroughs of the District of Massachusetts later granted CardiAQ’s motion for enhanced damages, awarding the company an additional $21 million and entering a $91 million judgment against Neovasc.

In rejecting Neovasc’s argument that prejudgment interest should not be conferred because the jury’s award depended on future events and reflected the value of CardiAQ’s damages only after the suit was filed, the court relied on the jury instructions that had been entered at trial. In particular, the jury had been instructed that if it found for CardiAQ on any of its trade secret claims, it was to determine damages under a reasonable royalty standard, defined as the amount that CardiAQ would have been willing to accept, and that Neovasc would have been willing to pay, if the parties had engaged in a hypothetical arms-length negotiation for the information before the misappropriation occurred. Although the jury had not offered any reasoning for its $70 million damages award, the court found that the jury’s decision reflected the amount that it believed Neovasc would have paid CardiAQ in a hypothetical negotiation occurring in 2010, well before the lawsuit was filed in 2014. The court therefore concluded that the verdict demonstrated the jury’s determination that CardiAQ should have received $70 million in 2010 and that CardiAQ was accordingly entitled to prejudgment interest on that figure.

The court also rejected Neovasc’s argument that CardiAQ was foreclosed from seeking prejudgment interest because the jury was never informed that such interest could later be added to the award, noting that Neovasc cited no authority for the proposition that a jury must be aware of the availability of prejudgment interest prior to making a determination of damages. The court also disagreed that an award of prejudgment interest would constitute a windfall to CardiAQ, finding instead that the award would fulfill the purpose of awarding prejudgment interest, namely to compensate CardiAQ for its inability to use the money that Neovasc should have paid it in 2010.

Lastly, the court found that CardiAQ was entitled to post-judgment interest of $2,354.27 per day from the date the judgment was entered until the judgment was satisfied, basing the figure on the $70 million jury verdict, the $21 million in enhanced damages and the $20,675,154 prejudgment interest award. As a result, the nearly six years between the trade secret misappropriation and the judgment in this case added over 20 percent to an already significant damages award.